Previously, I have shared my thoughts on the benefits of allowing your team members to utilise their annual leave to relax and regenerate. Annual leave has a number of great benefits, not only for the health of your employees’, but also the overall productivity and success of your business. However, I understand that employee’s leave requests do not always work to the best interests of the business. It’s important to understand that you do not always have to approve a leave request. Especially if that leave could be damaging to your business. Therefore, it is important to have an understanding of what grounds you are able to refuse an annual leave request.

What is Annual Leave?

Annual leave is an entitlement, which is accrued by all permanent employees. Employees accumulate 4 weeks of paid annual leave for each year of service.  However, as it is an entitlement, employers are unable to unreasonably refuse a request for annual leave. Similarly to other employment laws, legislation does not provide a definition for what constitutes an “unreasonable refusal”. The Fair Work Commission did confirm that “a decision to refuse a request for annual leave which is based upon genuine, sound business reasons would not usually be held to be unreasonable”. In order to determine if something is reasonable,  a range of different factors should be considered. In addition to applying a level of common sense.

A number of key factors that may come into the decision-making process can include the following:

  • The operational requirements of the business: You are able to consider the operational requirements of the business when reviewing a leave request. For example, a business may block out its peak period as a ‘no-leave’ period to ensure they have enough resources to cover the workload. However, if an employee provides an amount of notice that would enable you to make arrangements to cover their absence, your ability to refuse their request may be impacted. This may affect how reasonable a refusal would be.
  • The timeframe for dealing with requests: It is important to ensure you are responding to requests for annual leave within an appropriate timeframe. If you take an excessive amount of time to refuse a leave request, it may be deemed unreasonable.
  • The amount of notice provided by the employee: If the employee provides an unreasonably short amount of notice that does not provide the business enough time to adequately cover their absence the business may refuse the leave request.
  • The amount of annual leave the employee has accrued: You are not required to allow your employee to take any additional leave on top of what they have accrued. While many employers are willing to allow employees to take unpaid leave where they haven’t accrued enough, you are within your rights to refuse requests for unpaid leave. This excludes the entitlements for unpaid leave set out in the NES, for example unpaid parental leave.

It is important to manage this process carefully to ensure you are not opening up your business to unnecessary risk. By being too harsh, you may end up needlessly damaging an employment relationship. Or opening yourself up to the risk of a claim of adverse action.


Photo by Ben White

Author: wattsnext Group
The wattsnext Group blog is a compilation of ideas and expertise from the entire team, past and present with a few added gems from guest authors from time to time. With this collaborative approach, we can provide you with a broader perspective and high-level expertise across the small business landscape.

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